ISLAMABAD - Pakistan Tax Bar Association has asked the government to extend the scope of Voluntary Tax Compliance Scheme (VTCS) and bring all businesses irrespective of their nature within the ambit of scheme.
The government on January 1 announced a tax amnesty scheme for the traders to whiten the black money up to Rs50 million by paying a nominal 1 per cent tax. However, other professional services including chartered accountants, architects, dentists, doctors, engineers, interior decorators and lawyers have been excluded from the tax amnesty scheme.
The Pakistan Tax Bar Association has asked the Finance Minister Ishaq Dar to address the concerns of business community on the Voluntary Tax Compliance Scheme (VTCS) and remove ambiguities in Income Tax (Amendment) Act, 2016. The Association has also asked to extend scope of the VTSC to banking transactions of all undeclared bank accounts of filers as well as non-filers.
According to the association, it is apprehended with great concern by the business community that the VTCS is silent about the Sales Tax and it is feared that FBR is spreading a net in order to bring the traders in the ambit of sales tax through VTCS and afterwards they might face sales tax audit and investigations. Therefore, it would be appropriate to bring the VTCS both for income tax and sales tax. The amount of tax leviable may be ranged from 0.1% to 0.6%, as suggested, and a person whose undeclared accounts have either been detected by FBR or on voluntary declaration by any person may be exempted from investigation, adjudications and assessments of both of the taxes i.e., income tax as well as sales tax on payment of 01 to 0.6% tax on their banking transactions with effect from July 2009. It said that the association has received multiple queries and concerns from the business community regarding infirmities in the Voluntary Tax Compliance Scheme “VTCS” to be introduced through an Act of Parliament on which ground work is being done by FBR and Traders community.
It appears that Institute of Chartered Accountant of Pakistan (ICAP) and various tax bars of the country have not been consulted. In our opinion, the said consultation process is indeed necessary for the success of this scheme. In order to make this scheme successful in the interest of broadening tax base in the country and to bring maximum number of persons/entities into tax net, association has made an effort to draw your kind attention towards the shortcomings in the VTCS. In this regard, recommendations have been submitted to Finance Ministry for immediate action.